Fujitsu today announced that it has developed a technology for the highly precise alignment of nodules, or growths of cells, within computed tomography (CT) images taken of the same patient on different dates.

Fujitsu Laboratories Ltd. today announced that it has developed technology that uses ICT for low-cost detection of early signs of sewer system overflows in order to mitigate damage in cities stemming from torrential downpours.

Fujitsu Limited and Fujitsu Systems Business (Thailand) Ltd. today announced their joint development of an education support system for the Kingdom of Thailand's Chulalongkorn University Demonstration Primary and Secondary Schools.

Fujitsu Laboratories Ltd. today announced that it has developed a technology that, in the event of a cloud network failure, enables even non-experts to identify the impact of that failure on virtual systems - within 10 seconds.

Fujitsu today announced plans to construct new annexes at its Tatebayashi System Center and Akashi System Center, its main data centers in Japan, to serve as the core facilities for accelerating its IoT and cloud businesses.

Fujitsu today announced the release of two new models in its FUJITSU Tablet ARROWS Tab line of enterprise tablets running Windows and four new models in its FUJITSU Notebook LIFEBOOK line of enterprise laptop PCs.

Fujitsu Limited and Fujitsu Laboratories Ltd. have announced the development of the industry's first technology for identifying users vulnerable to cyber attacks based on the ways they use their computers, such as their e-mail and web activities.

Fujitsu today announced the launch of FUJITSU Vehicle ICT FEELythm, a new wearable sensor product that promotes safer driving. Intended for use in the transportation sector, FEELythm will initially be sold in Japan from February 2015.

Fujitsu's revenues are dependent on economic cycles, fluctuations in the Yen currency, and information technology trends. Contraction in discretionary spending decreases demand for consumer electronics that Fujitsu manufactures. The sharp global economic downturn in late 2008 led to a 17% decline in demand for Fujitsu's personal notebook computers, storage devices, and mobile phones for the last three months of 2008.[5] Also impacting Fujitsu's bottom-line is movement in the relative value of Yen to other currencies, especially the [[U.S. Dollar (USD)|U.S. Dollar and Euro. A weakening Yen helps boost international sales and decreases the burden of domestic G&A expenses. Last, shifts in government policies and corporations strategies impact Fujitsu's businesses. More global outsourcing benefits Fujitsu, as does Obama's policy to make healthcare records accessible via an electronic network.[6]

Financial Highlights

Error creating thumbnail

Strong sales in consumer electronics supported sales growth; however, a sharp contraction in discretionary spending led to slowdown in sales in the 2H of 2008[7]. Fujitsu earned Y4.7 trillion for FY2008 ended March 31, 2009.[5]

Fujitsu grew sales from Y4.79 trillion for FY2005 ended March 31, 2006 to Y5.33 trillion for FY2007. Healthy sales of hard drives, mobile phones, and notebooks helped increase total sales 6.45% for FY2006.[8]Operating profit margins were advserly impacted by pricing pressure in consumer electronics, but growth in information technology services counteracted the contraction in margins. The strength in personal electronics carried into FY2007 ended March 31, 2008.[7] Hard drives sales hit a record, PCs and mobile phones sales in Japan were strong, and notebook sales in the US grew as well.[7] Overall, these sales grew 6.3% over FY2006. Revenue from Fujitsu's device solutions business segment also contributed to improved revenue. The division, which sells semiconductors had sales grow 14.1% in Japan and 9.9% outside the country.[7] Enter the 2008 global recession and sales of consumer electronics plummet. Fujitsu sells the company's hard drive manufacturing business to Toshiba (TOSBF) to avoid US$112 million in losses,[9] and Fujitsu's semiconductors manufacturing lines go from utilizing 70% of production capacity in Mid-2008 to 40% at the beginning of 2009.[10] In May 2009, the company released FY2008 revenue of Y4.7trillion and operating income of Y69billion.[1]

Fujitsu's Business Segments

Error creating thumbnail

Information technology products and services formed 57% of total sales for the FY ended March 31, 2008. Device and Ubiquitous product solutions, which are dependent on consumer electronic sales, accounted for 35% of FY2007 revenue.[2] Due to the fact that Technology solution revenue are tied more to business outsourcing and government infrastructure systems, the cyclicality is less than device and ubiquitous divisions.

Error creating thumbnail

Japan (domestic) accounts for almost 2/3s of Japan's sales. The Americas account for 10%. An appreciating yen applies pressure to profit margins as foreign revenue is worth less Yen.[2]

Fujitsu's businesses are divided into 3 main segments that accounted for 91% of revenue for FY 2007.[11]

The bellwhether of Fujitsu, technology solutions include system platforms and related services. The division manufactures system and network servers used by businesses to manage information flow. Fujitsu sells the equipment and charges customers to implement services to help run them. Main customers include multi-national corporations that operate on a global platform. Fujitsu helps these companies communicate across their platforms as they outsource specific duties such as manufacturing or customer support to different locations. The Japanese IT provider also has a presence in infrastructure services. Fujitsu will build and sell systems that collect and monitor information captured in transportation traffic and water treatment systems. Revenue grew from Y3.16 trillion in FY2006 to Y3.27 trillion in FY2007.[11] This division is less cyclical than Fujitsu's device and ubiquitous product solutions as service revenue lies under extended contracts and companies still want to increase efficiency in order to minimize costs during recessions.[5] For April-December 2008 sales declined 2.8% from the year prior.[5]

Ubiquitous Product Solutions (US$11.9 billion, 20.6%)

This business segment of Fujitsu manufactures PCs, mobile phones, and until April 2009, hard drives. For FY ended March 31, 2008, PCs and mobile phones formed 70% of this segment's sales and hard drives accounted for 30%.[11] FOMA is the main brand of mobile phones and FMV is for notebooks. This segment had steady growth of Y948 billion in FY 2003 to Y1,189 billion in FY 2008 as the global economy continued to expand.[11] However, the sharp decline in consumer discretionary spending led to a decrease of 17.4% in sales for April-December 2008 compared to the previous year. Consumers extended upgrade phone cycles, and increased competition in PCs and HDDs led to price slashing.[5]

Device Solutions (US$8 billion, 13.8%)

This business segment manufactures LSI devices and related electronic components. These seminconductors go into consumer electronics such as music players, cameras, and cell phones. Similar to the Ubiquitous Product Solutions, this division is dependent on consumer discretionary spending. Adverse economic conditions lead to sudden contractions in demand for this business segment's products. For April-December 2008 revenue collapsed 18.4% compared to the prior year.[5] For the 1st quarter of FY2008, sales were 13.5% lower, 2nd (-22.4%), and 3rd (-30.8%).[5]

Changes to Fujitsu

Fujitsu announced that the Japanese manufacturer will buy Siemens stake in the companies' 50-50 joint venture called Fujitsu-Siemens Computers. Fujitsu will pay Siemens EURO450 million. FSC generated revenues of EURO6,617 for the FY ended March 31, 2008.[12] PC and server sales accounted for 3/4s of total sales.[3]

Established in October 1, 1999, Fujitsu-Siemens Computers (FSC) was a 50-50 joint venture between Fujitsu and Siemens. At the time, Fujitsu had a large presence in Japan and Siemens in Germany; however, the two companies had limited exposure outside their respective markets. In order to compete with Dell (DELL), Hewlett-Packard Company (HPQ), and International Business Machines (IBM), Fujitsu and Siemens formed the alliance to deliver PCs and servers into the European, Middle Eastern, and African markets.[9] As of March 2008, FSC had a 3.3% market share of the global PC business[12] and 40% of the FY 2007 revenue of EURO6,617 million was generated in Germany.[12] Fujitsu will pay EURO450 million in exchange for Siemen's 50% stake on April 1, 2009.[13] Management of Fujitsu says the acquistion will let the company better focus its attention on the strategic sectors of energy, industry, and healthcare.[13] Furthermore, whole ownership gives Fujitsu the ability to better execute its change of business structure (June 2008) from independent regions to organized global business units.[3]

In February 2009, Fujitsu announced the company plans to sell 80% of its hard drive manufacturing business to Toshiba for an undisclosed amount with the intention of selling the remaining 20% at a later date.[9] The economic slowdown has applied pressure to hard drive demand as fewer consumers buy PCs.[5] By selling the division, Fujitsu protects itself from the US$112 million in expected losses for FY 2008 from the division.[9]

Market Trends & Forces

Fujitsu's device solutions and ubiquitous product solutions accounted for 35% of revenue in FY 2007.[11] These two business segments depend on sales on cell phones, music players, cameras, and other consumer electronics.[11] During recessions, these purchases tend be foregone, while staples, such as food and electricity, do not fluctuate as much. This volatility in demand leads to sudden changes in Fujitsu's sales volume. Through 2006 and the 1H of 2008, the growth in mobile phone sales and computer notebooks drove Fujitsu's growth[8][7]; however, the 2H of 2008, these sales plumetted. For April-December 2008, sales of PCs, mobile phones, and hard drives fell 17% outside of Japan compared to the prior year.[5] The semiconductors manufacturing unit, which supplies devices used in consumer electronics, had sales decline 30.8% in October-December 2008 compared to October-December 2007.[5]

An appreciating Yen hurts Fujitsu. The company generates 36% of its revenue abroard.[11] A strenghtening Yen means sales overseas are worth less in Fujistu domestic currency. The impact is not insignificant. When the company lowered FY2008 guidance, it cited an appreciating Yen. From October 2008 to February 2008, Fujitsu lowered its FY2008 net sales expectations by Y350 billion - Y100 billion of which was cited as an appreciating Yen adversely impacting sales.[14] Operating income was decreased Y100 million; the stronger Yen contributed to Y10 million of the decline.[14] During the 2008 Financial Crisis, investors unwinded the their carry trade. They had borrowed in Yen, which charge little interest, and invested in higher-yielding currencies or equities in other countries. As financial markets weakened, investors scrambled to cover their short position in Yen, which sent the Yen higher. Not only did the faltering economy hurt demand for Fujitsu's products, the stronger Yen meant its products were less competitive to other manufacturing countries.

As companies expand internationally, the need for management information flow increases. A company's sales office in country A, manufacturing site in country B, and customer support in country C all need to be in communication with each other. As the complexity increases and amount of information transferred increases, Fujitsu's opportunity to offer products and services rises. Fujitsu manufactures network servers and offers IT services to manage the flow of information. IDC forecasted global outsourcing market annual growth at 8.4% for 2007-2012.[11] During March 2008, Reuters signed an 10-year global deal to let Fujitsu transform, operate, and maintain its internal IT infrastructure and company applications across 100 countries.[11] Also, government policies play an important role in creating opportunities for Fujitsu. Obama's Presidential Policy calls for moving all healthcare records to a linked electronic database, so that individual doctors are able to see a patient's history, which is expected to save time and prevent replication of tests already done.[6] Fujitsu offers electronic medical record systems.[15]